The world’s leading contract chip manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC), is advancing its international footprint through significant developments on two continents. Strategic tariff reductions and substantial investment pledges are reshaping the company’s operational and financial landscape in the United States, while European initiatives under the EU Chips Act are catalyzing new manufacturing and design projects.
European Ambitions: A Dresden Fab and Munich Design Hub
In Europe, TSMC is moving forward with concrete plans under the framework of the EU Chips Act. The European Semiconductor Manufacturing Company (ESMC), a joint venture established by TSMC, Bosch, Infineon, and NXP, is planning a new fabrication plant in Dresden, Germany. The total investment required for this facility is estimated to exceed 10 billion euros, with reports indicating approximately half of this sum is expected to come from public funding.
TSMC is set to hold a 70% stake in the Dresden operation. This factory is intended to supply advanced semiconductors for the region’s automotive, industrial, and artificial intelligence (AI) applications. Furthermore, the project has applied for designation as an “Open EU Foundry” under the terms of the Chips Act, which could provide additional strategic benefits.
Complementing the manufacturing push, TSMC is establishing a European design center in Munich. This facility aims to accelerate chip development and foster innovation through closer collaboration with European partners.
Trans-Pacific Trade and Investment Shifts
A recent agreement between the United States and Taiwan has resulted in lowered tariffs on Taiwanese imports. The duty rate has been reduced from 20% to 15%. For TSMC, this change means chips manufactured in its home territory and imported into the US market will become less expensive, potentially improving its competitive pricing position against rivals such as Samsung Electronics and Intel.
Should investors sell immediately? Or is it worth buying TSMC?
This tariff adjustment is part of a broader package that includes a significant investment commitment from Taiwan. Over $250 billion has been pledged for US projects focused on semiconductors, energy, and artificial intelligence. TSMC’s contribution to this initiative amounts to $100 billion, firmly linking the company’s expansion to US infrastructure plans for AI and high-performance computing.
However, this deeper integration into the US market carries inherent challenges. It introduces higher fixed costs, increases operational complexity across multiple geographic regions, and may bring additional political expectations regarding the allocation of manufacturing capacity.
The EU Chips Act: Surpassing Investment Targets
The European Commission reports that the Chips Act, enacted in 2023, has already triggered investment commitments surpassing 80 billion euros. This figure nearly doubles the legislation’s original target of 43 billion euros. More recent data from the Commission suggests that total pledged investments could reach approximately 100 billion euros by 2030.
Despite this substantial capital mobilization, Europe’s share of the global chip production market remains around 10%. Analysts attribute this to equally aggressive investment campaigns in other regions, highlighting the intensely competitive global race for advanced semiconductor manufacturing dominance.
Execution and Future Outlook
The focus now shifts to implementation. Key questions remain regarding the pace at which TSMC will execute its massive investment programs in the US and Europe, the timeline for bringing new factory capacities online, and whether the current surge in AI demand will translate into long-term, contractually secured capacity commitments. The company’s ability to manage this period of rapid, multi-front expansion will be critical to its future performance.
Ad
TSMC Stock: Buy or Sell?! New TSMC Analysis from February 19 delivers the answer:
The latest TSMC figures speak for themselves: Urgent action needed for TSMC investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from February 19.
TSMC: Buy or sell? Read more here...
